The official blog of the Association of Washington Business, reviewing the news and events shaping business and politics.

July 23, 2007

How Did I Miss This?

OBW readers know we have no reticence when it comes to concerns about Washington's novel paid family leave mandate (e.g., here, here, here, here, here, here, and here, and many more -- you get the idea). This take, admittedly a few weeks old, is worth reheating. It comes from Washington CEO Magazine's law section, and relies heavily on the views of AWB and its members:

"We know a mandatory benefit is coming in October of 2009, we know how much it will be, but we don't know how or who will pay for it, and we don't know how or who will administer it," explains Kris Tefft, general legal counsel for the Association of Washington Business (AWB).

AWB lobbied hard against the act, as did myriad business groups, including the Alliance of Washington Cities and the National Alliance for Small Business. They believe the Act will disproportionately harm small businesses. Unlike current family leave legislation, which exempts companies with fewer than 50 employees, the Paid Family Leave Act applies to all companies.

I couldn't keep my mouth shut about how bad this new law is:

Overlapping laws regarding family leave make the issue particularly troublesome. AWB's Tefft points out that family leave is now regulated by a federal family leave law, two state laws and the Human Rights Commission's maternity disability regulation. "What you see is this patchwork quilt of state and federal leave laws, not all of which operate consistently," he says.

AWB Board member and small business owner Judy Coovert of Printcom, Inc., is also quoted:

"I've got three printing press operators. What if two of them decide to take the leave?" says Coovert. "There is nothing I could do to stop them. You're not going to be able to find temps, not in our industry."

Coovert is also concerned that some of these employees on leave could end up on unemployment. That could mean higher rates on her unemployment insurance. She is reminded of 9/11, when, following the terrorist attacks, business dropped and she had to lay off several workers. In one year, her unemployment insurance rate doubled to 4.2 percent of employee wages before ultimately climbing to 6.15 percent. "If you're a small company like we are, and if you have even a few employees take unemployment, it affects your (rates)," says Coovert. With just 14 employees, she paid $18,757 in unemployment insurance last year.

The effect on unemployment is one of the many unintended consequences of this bill.

AWB President Don Brunell gets the last word in the article:

In a letter to Gov. Gregoire, Don C. Brunell, president of AWB, said the new law would bring Washington closer to "the countries of Europe, with stagnant economies and crumbling welfare benefit structures," and make it more difficult for the state to compete with more dynamic Asian powers such as India and China.

Added Brunell: "What the Legislature has done ... is enact a programmatic mandate that only one other state in our nation, California, has put into place, and one that is entirely foreign to our new global competitors to the east."